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Whether you put money in a Roth account (Roth IRA or Roth 401k) depends on your future earnings potential. If you think you will earn more in the future than yo
by enraged_camel 10y ago
Whether you put money in a Roth account (Roth IRA or Roth 401k) depends on your future earnings potential. If you think you will earn more in the future than you do today, it makes sense to contribute to a Roth. The reason is that you pay less taxes now than you will in the future, and money inside Roth accounts grows tax-free.
I don't quite understand how your current city's cost-of-living factors into this equation. At the end of the day your investment choices are primarily governed by your income tax bracket now vs. in the future. This holds true regardless of whether you are planning to retire in a low cost-of-living city - which is something everyone should plan to do anyway regardless of the type of retirement account they have.
- closeparen 10y agoI expect my 401k withdrawals in retirement to be much smaller (in real terms) than my present income, and therefore taxed at a lower rate, as my salary is heavily inflated above what my standard of living would require due to 1) local rents, and 2) my savings rate. With sane housing priced and no need to save, I could live the same way on about $45k/yr less.